VANCOUVER: An affordability advocate is urging the British Columbia government to make amendments to tax gaps being exploited by the real estate industry.
In the last month, Rohana Rezel said he saw listings for two multi-million dollar properties – one in Vancouver and another in West Vancouver – stating that buyers can avoid paying tax.
That’s due to the fact that the assets are owned by bare trusts, allowing buyers to avoid transfer taxes. The properties are owned by a firm so when they’re sold, they can just change the names of the directors of that company.
“The way it’s done is – you just change the director of the trust and you are good to go,” Rezel says.
Vancouver has made some alterations with a new registry, but Rezel belives that only goes so far.
“Under the new regulations you can’t just hide behind a bare trust, but in terms of avoiding taxes – you still can do that.”
For now, Rezel says the names of the directors listed on bare trusts are known, yet they still don’t have to pay tax.
The province has promised to deal with this tax loophole and is creating a beneficial ownership registry to go online in 2020. Rezel says it’s time for them to take the next step and shut the gap.